Question 2 is a tool of the special interests

Last week I may have undersold the biggest reason why the referendum process has become such a train wreck.

It is a tool of special interests.

A look at recent ballot initiatives shows that they are always engineered by large, well funded special interest groups intent on using Maine as an experimental playground for extremist policy.

It is easy to create simple, emotional arguments for really bad policy. Easier than passing a law the old-fashioned way.

Take, for instance, question two on the ballot this year. “Do you want to take some of that money that those evil, greedy rich people don’t need and give it to kids?”

That soundbite, in effect, is being used by the Maine Education Association — the ultimate special interest in Maine — hoping the average voter emotionally responds to it without thinking.

In reality, this question is a cynical attempt to dump millions of dollars into the hands of administrators and bureaucrats while crushing the Maine economy.

Any sober analysis of the question shows it to be complete and total insanity.

If passed, Maine would suddenly have the second-highest top marginal income tax rate in the United States, and the highest income tax rate in Maine history.

The increase in taxes would directly impact approximately 16,840 tax filers in Maine. But contrary to Scrooge McDuck diving into a money bin, these “high income” earners are frequently not very wealthy at all.

A majority of businesses in the state of Maine are not subject to the corporate income tax. Instead, profits pass through the owners’ individual income tax.

That profit is not a giant paycheck to the owner. It is business profit used to re-invest in the company to grow it, pay debt, hire new people, or develop products. The owner often takes very little of the profit, actually.

Pass-through entities in Maine accounted for more than 60 percent of private-sector employment in 2012. Tax hikes on these filers are a tremendous tax burden shoveled onto Maine’s small business community.

An analysis by the organization I lead, the Maine Heritage Policy Center, shows that such an irresponsible tax hike would lead to a decline of 4,050 jobs by 2021.

And that may be optimistic. When faced with the twin problems of income tax-free New Hampshire and Florida, the risk of “wealth flight” becomes significant.

Maine needs more high-earning individuals, not fewer. They pay income taxes to the state, property taxes to towns, invest in businesses that create jobs, and fund charitable non-profits. When they leave, they pay nothing.

And they will leave. More importantly, they will never come here in the first place.

It is clear the additional tax would be destructive. But remember, the MEA also tried to sell this to you by telling you it was good for kids. But this isn’t about kids.

Even if it did what proponents said it would, the money wouldn’t help those who need it most. The funds would heavily favor wealthy school districts, with 14 towns that have an annual median household income in excess of $70,000 — like Falmouth, Cape Elizabeth, and Yarmouth — slated to receive $22 million.

Meanwhile, many of the state’s poorest towns, largely in rural Maine, get nothing.

And what money does trickle down to those wealthy towns won’t actually go into the classroom anyway. It would actually fund administration and salaries. And you wonder why the MEA came up with this idea?

And that doesn’t even deal with a more fundamental problem: money and educational results are not, and never have been, correlated.

Student enrollment in Maine peaked at about 250,000 students in the 1970s. Since then, we’ve seen a decline of more than 60,000 students, yet budgets have exploded. Federal, state and local contributions have risen by well over a billion dollars in that time. Since the early 2000s, Maine’s per-pupil spending has risen by roughly $4,000.

And what has happened to educational results in Maine? They’ve declined.

Money isn’t the problem. The problem is a system that sucks the money we spend into a black hole of administration, while teaching a substandard, bar-lowering curriculum, monitored by armies of bureaucrats who turn teachers into data collectors and test facilitators.

I should know, my wife is an elementary school teacher.

If you really want to “Stand up for Students,” deal with that broken education system. Stop using the referendum system to destroy the Maine economy to give favors to special interests.

Matthew Gagnon

About Matthew Gagnon

Matthew Gagnon, of Yarmouth, is the Chief Executive Officer of the Maine Heritage Policy Center, a free market policy think tank based in Portland. Prior to Maine Heritage, he served as a senior strategist for the Republican Governors Association in Washington, D.C. Originally from Hampden, he has been involved with Maine politics for more than a decade.